LONDON - Obscure private firms are offering Iranian crude oil at steep discounts to European oil traders as Tehran seeks ways to restore oil export flows hit by Western sanctions.

Traders who buy crude for European refineries say they are are getting daily calls offering Iranian crude, sometimes accompanied by the promise of fake paperwork to disguise it as oil from a different origin.

Seeking to reverse a slump in exports caused by US and European Union sanctions, Tehran last month scrapped a strict policy of marketing oil only through state National Iranian Oil Company (NIOC) to let private companies trade.

The sanctions, aimed at pressuring Iran to abandon what the West says is a nuclear arms program, have almost halted Iran's oil sales to Europe. The EU banned imports from July 1 and non-EU Turkey has slashed purchases.

Iranian oil initially destined for Turkey is now building up in at the Egyptian Mediterranean transit port of Sidi Kerir and is being offered in the European oil market by a growing number of small firms.

"They are all crazy offshore companies, mainly Iranian guys behind them," said a senior crude trader at a large state oil firm. He said most of the offers were made by telephone.

Not all sellers of the crude are based outside Europe. One offer seen by Reuters was posted on the online marketplace Alibaba by a firm based in Italy.

Salama Import and Export listed itself as a provider of both light and heavy Iranian crude grades with capacity to supply 1.2 million barrels per month for loading from Sidi Kerir.

The advertisement for May delivery included a detailed a pricing formula to be effected in Turkish Lira or Euros and was taken down from the website a few hours after a Reuters reporter contacted the general manager, Saef Salama, by phone.

"The advertising is old," Salama said. "If you want Iranian oil, you have to contact the Iranian oil ministry."

The company's registered address, on the outskirts of Rome, displayed a doorbell with the firm's name written in hand.

The low-rise block, part of a modest but tidy new development, appeared mainly residential, with Italian and foreign family names listed on the intercom.

Sellers offer to help sidestep sanctions

The EU's ban covering oil imports and shipping insurance combined with US measures against dealing with Iran's central bank have cut Iran's oil exports by 50 percent since February.

The insurance ban has prevented Turkish vessels from loading Iranian oil from Sidi Kerir -- the terminus of the Sumed pipeline which transports Iranian, Saudi, Iraqi and Egyptian oil from the Red Sea to the Mediterranean.

Traders say up to seven million barrels of Iranian crude, or seven medium-size shipments worth around $700 million, is stuck in Egypt and being offered cheaply for immediate loading.

Some sellers offer to help sidestep sanctions or unwanted publicity by providing an Iraqi certificate of origin and fictional pricing details to match.

The head of one crude oil desk said he received around three phone calls a day with offers of steeply discounted crude.

"The issue now is that the oil is trading at a significant discount -- so you are looking at bigger profits. The question is for what price will you risk going to jail," he said.

The crude was also being offered in part cargoes, by-passing the problem of certification altogether, he said.

Tankers could sail into Egypt carrying 75 pct full of genuine Iraqi crude, then fill the rest up with Iranian oil. The grades would be similar enough for the cargo to pass any test.

The Iranian oil ministry did not answer calls to its public relations office.

Traders and Western diplomats have said they expected Tehran to step up efforts to sell crude via private firms as Iran's pool of buyers is shrinking fast with just four countries -- China, India, Japan and Taiwan -- purchasing this month.

"It is a matter of time more than anything else before we start to see traders working out a way to ship Iranian crude," a Western diplomat said.

However, one dealer with a trading house said he doubted the private firms would able to shift much volume because of financial complications.

"The banks are so scared of the sanctions that they are policing any transaction even remotely resembling an Iranian deal. And without banks you cannot do much. Unless you are crazy enough to bring cash in a case," he said.

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